Calculate asset activity ratios
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Use the annual information found that can be found by reviewing attached file to answer this assignment. Calculate the following asset activity ratios for the end of 2005:
Average Collection Period
Inventory Turnover
Total Asset Turnover
please show all work, including formulae and calculations used to arrive at financial values.
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Hi there,
Here is some information for you regarding the above ratios:
Average collection period
The average time period for which receivables are outstanding. Equal to accounts receivable divided by average daily sales. also called collection ratio.
55.514 / (2004.016 / 365)
= 55.514 / 5.49 = 10.11
Inventory Turnover
Sales / Inventory
or
Cost of Goods Sold / Average Inventory
A ratio showing how many times a company's inventory is sold and replaced over a period.
Although the first calculation is more ...
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